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Advice needed on investing $10,000.

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  • Advice needed on investing $10,000.

    Hello guys, gals!

    So my girlfriend (soon to be fiance) and I started saving up for a down payment on a first home, roughly a year ago. Currently we have a small, but hopes to get fatter' $10,000. We are in the predicament of where we will deposit this money into instead of it sitting and collecting dust. We try to contribute a minimum of $1,000 combined but will be increasing our deposits to $1,500 combined this month and will repeat that each month. I'm very interested to hear some advice being shed on what to do with the initial $10,000 and in general a good tune-up of what we could do with the money to benefit the growth of it for when we are ready to commit to a mortgage. In advance, I appreciate your time and advice guys and gals! I look forward to hearing suggestions, if you require any further information, please do not hesitate to ask!

  • #2
    Since this money is for a down payment do not put in the stock market.

    Capital One 360 Savings or Ally Bank are two options for better interest

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    • #3
      Was seeking a little more in-depth, outside the box approach. But I suppose for such a small dollar amount, what could I possibly expect to be able to do with it?

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      • #4
        Originally posted by ForeverStrong View Post
        Was seeking a little more in-depth, outside the box approach. But I suppose for such a small dollar amount, what could I possibly expect to be able to do with it?
        10k isn't that small but the problem with investing is that it involves risk. Do you want to risk that your balance may go down just when you need it? Probably not.

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        • #5
          how much are you expecting to pay for a house?

          With 10k saved up now, you could afford a house of 50k using the 20% down rule. And then you have to buy furniture, appliances, etc for the house. And you need a EF of around 6 months expenses once you own a home.

          It is great that you saved up 10k and are on the path to save 1500/month. Given that you need the money in the near term, investing is not a wise approach assuming that your ultimate goal is owning a home.

          Are you familiar with an amortization schedule and how to determine how much in interest alone you will pay on a mortgage?

          Are you considering a mortgage term of 15 or 20 years instead of the standard 30 years?

          Are you going to be sure that you do not need to pay PMI by putting 20% down?

          Given the situation, I think these are things you should be worried about now. Any investing should be in a 401k or Roth account.

          Here to help, ask away!

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          • #6
            Originally posted by ForeverStrong View Post
            Was seeking a little more in-depth, outside the box approach. But I suppose for such a small dollar amount, what could I possibly expect to be able to do with it?
            Assuming you don't want the value of these funds to decrease, they should not be invested in equities or bond funds.

            Your options are CDs and money markets. You're not gonna earn much interest, but that's your best course of action.

            Note - you don't have to let it sit in a checking account earning nothing. You can get 1%, if not a little more.
            seek knowledge, not answers
            personal finance

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            • #7
              An easy investment is hard to find, mainly because you'll need to do some research on your own.
              Secondly it's not easy for someone else to see if it's a big amount for you or if it's spare change.

              The first question you'll need to ask yourself is it money you can afford to lose?
              Based on this question you can start looking at
              A) low risk/low return options (like a bond, some ETF's, etc)
              B) a little higher risk/but also a higher return (like gold/oil/ stockmarket or Forex, etc).

              If you made your choice the next question will be what sort of returns do I expect (a fixed income or rather a floating profit).
              I would go for a floating profit, because in good months you'll earn allot more money than during fixed incomes.

              Another question you'll need to ask yourself is, would you want to put this $100,000 in one investment or do you rather feel comfortable with diversifying?

              I've been in your shoes and decided to take a bit higher risk profile and startet to look around for investment software and it's paying off till now.
              Take your time to find an investment that suits you!

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              • #8
                I would put the money in an online savings account, earning at least 1%. I use Mysaving direct, Barclay's Bank and G.E. bank right now.

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                • #9
                  Originally posted by Petunia 100 View Post
                  10k isn't that small but the problem with investing is that it involves risk. Do you want to risk that your balance may go down just when you need it? Probably not.

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                  • #10
                    CDs will get you a little bit better return with the same security as a savings account. Worth looking into.
                    Will
                    Latest Blog Post: Stop Slacking and Create an ETF Portfolio

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                    • #11
                      Consider a bond fund. Some of the vanguard ones pay a nice monthly dividend and if you hold onto it long enough you can make make enough to cover the transaction fees, plus get a good chunk of cash. Bonds are less risky than stocks and significantly better than cash equivalents like Certificates of Deposit (CDs).
                      james.c.hendrickson@gmail.com
                      202.468.6043

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                      • #12
                        I agree with online banking. I used Barclay's, at 1%. It's not going to yield a huge amount, but it'll be safe for when you need it. I'm assuming the home purchase is coming in less than 5 years?
                        http://frankfacts.org/

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